Morning Brew Daily - Bezos Saving $600M in Miami Move & Zuck Roasts Apple Vision Pro

Episode Date: February 15, 2024

Episode 258: Neal and Toby chat about Bezos’ sale of $4 billion of Amazon stock and his move to Miami where he could save $600 million in tax benefits. Billionaire flex. Then, Bitcoin is so back as it reaches the $1 trillion market cap. Does it have something to do with the EFT hype? Next, the Zuck takes a shot at Apple with his “honest” review of the Vision Pro. Plus, Neal’s numbers from Baylor, Cornhole, and Taylor Swift (yes, again). Also, a poignant response by Lyft’s CEO over its “extra zero” typo mess. Lastly, rom-coms aren’t going away just yet. Why they might be going through a renaissance in Hollywood. Get your Morning Brew Daily Merch HERE: https://shop.morningbrew.com/products/morning-brew-daily-sweatshirt?utm_medium=multimedia&utm_source=podcast&utm_campaign=mbd&utm_content=shownotes Listen to Morning Brew Daily Here: https://link.chtbl.com/MBD Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

Consider this comparison. PWC data found the percentage of CEOs who report revenue gains or cost reductions from AI is almost equal to the percentage who say they're still stuck. What separates these two groups? PWC points to a clarity issue. Even for CEOs, it's hard to tell what's AI hype, what's reality, and where this tech can make a tangible difference. Learn where AI can actually make an impact and what successful adoption looks like at

at pwc.com slash US slash brew AI. That's pwc.com slash us slash brewAI. Good morning brew daily show. I'm Neil Freyman. And I'm Toby Howe. Today, CEO entrepreneur moved to Miami to avoid taxes in 2024, Jeffrey, Jeffrey, Jeffrey Bezos. Then Mark Zuckerberg filmed a remarkably candid video telling us exactly what he thinks about the Apple Vision Pro. It's Thursday, February 15th.

That's right. What was supposed to be a celebratory day in Kansas? The city turned to horror when at least one person was killed and more than 20 people were injured in a mass shooting at the end of the Chief's Super Bowl victory parade. The shooting occurred outside Union Station on the edge of downtown, despite more than 800 police officers who were in the building and nearby. Because this was a massive event that the city had looked forward to since Sunday's victory. Authority said three people were detained, but haven't identified a motive. Yeah, apparently the Chiefs players have really stepped up to helping calm kids down. interacting with the community. But yeah, just a truly terrible thing. And we are certainly keeping

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Well, if you're a multi-billionaire selling massive amounts of stock, Jeff Bezos, who hasn't sold his Amazon share since 2021, offloaded $4 billion worth this week as part of a two-year plan to trim his holdings. The question everyone is asking, why now? Well, his move to Florida from Washington seems to have a lot to do with it. Last November, Bezo said he was moving to Miami to be closer to his family and his space company Blue Origin. But what a strange coincidence. He'd also be saving hundreds of millions in taxes with a change of address.

That's because Florida has no taxes on capital gains. While in 2022, Washington imposed a 7% capital gains tax on sales of assets more. than $250,000. So because of this move, Bezos has already saved $288 million in taxes he would have paid to Washington, and it could ultimately save him at least $610 million when all of the stock sales go through. Toby, this is a pretty stark example of how tax policies in different states can lead to the reshuffling of wealth across the country with significant impact for government revenues. Yeah, it's definitely a big loss for Washington.

I'll tell you that. The state brought in $900 million from that new 7% capital game. SAC in 2022, which absolutely blew past their estimates, but more than half of that revenue came from just 10 people. So when you're losing someone like CEO entrepreneur, Jeffrey Bezos, it actually does impact the bottom line of the tax revenue that the state was expecting to generate. Yeah, I mean, that Bezos would have provided a quarter of all the gains from the capital gains tax.

It really is an interesting fine balance you have to strike for states because Washington is home to a decent amount of wealthy people because it is also. the home to Microsoft, Starbucks, Boeing, huge corporations. Amazon. Amazon. Yeah, I forgot about Amazon. So there's a balance you have to strike. We have these really wealthy people and corporations in our state.

We want to make money from them via taxes because why else have them? But you don't want to go too far in the other direction and cause them to leave. And we're seeing a mini exodus of sort. Other billionaires are leaving Washington. California is suffering a similar problem. They're moving to these lower tax jurisdictions in Texas and Florida. And in this increasingly mobile society where a billionaire can just pick up and buy a $200 million house in Miami, they're probably going to do that if they can save whatever Jeff Bezos is saving, $610 million.

Yeah, it's definitely a dangerous and fine line, not dangerous, but a fine line that Washington is walking here, where you want people to pay their fair share, but you also don't want to disincentivize these people. I'll tell you who is welcoming them with open arms, though. It is Florida. Florida has been absolutely cooking Miami specifically. Remember, Ken Griffin from Citadel, moved to Miami during the pandemic. It's now building a $1 billion office space there. He also said that he thinks that Southeast can eventually surpass New York as the financial center of the company. So a lot of attention. Amazon is building out a bigger footprint in Miami as well. Bezos is snapping up houses there. He paid $79 million for a mansion and then bought the next property over for $68 million.

So a lot of money flowing into South Beach in particular. Miami is the fifth most important real estate market for the world's wealthiest people right now, which is kind of crazy to think about. It's only behind Los Angeles, Hong Kong, New York, and London. It's not that big of a city, but because of its tax policies and maybe its weather, too, that might have something to do with it. The world's wealthiest are really flocking there. And you're seeing shifting geographies all over the place in the corporate world these days.

Elon Musk has pulled Neurrelink incorporation out of Delaware and moved it to Nevada. And then just this morning, or late last night, actually, he reincorporated SpaceX from Delaware to Texas. So you are seeing a lot of movement away from the northern cities that have heavier tax policies to the south in this increasingly mobile world. Absolutely. Let's move on. we have another trillion dollar market cap to tell you all about, but it's not part of Fang or the Magnificent Seven. It's not even a company at all. It's Bitcoin. Bitcoin is back, baby. Its recent rally pushed its market cap back into the 13 digit club for the first time since November

of 2021, and its price to over $51,000. That would make it the eighth largest company in the world, if you know, it was a company. It seems that the recent price rebound is driven mostly by the same excitement that kicked off this rally, the approval of Bitcoin ETFs by the SEC. Since that, rather begrudging approval, things have been going quite swimmingly for the cryptocurrency. Coin shares data on Monday showed that inflows to the new Bitcoin ETFs are well ahead of outflows. A net $2.8 billion has been deposited since their approval in January, with $1.1 billion coming in the last week alone. So it seems like interest hasn't fallen off and is, in fact, accelerating instead. I'll say it again, Neil. Bitcoin is back. People still don't know what Bitcoin

can be used for, but apparently one thing it does do and has shown it does do over the course of its, you know, more than decades long run is go up in price. And that is a good enough reason for people to buy in. I mean, it's all-time high with $69,000 and it's at 52 this morning, even higher than $52. So it's getting close to its all-time high after, all that's happened. We've seen boom and busts over its course of its history, but every time it seems to collapse, it grows even higher. Yeah, I do think that what we're seeing here is a lot of people celebrated the arrival of Bitcoin ECFs as the arrival of institutional money getting involved with Bitcoin.

And I think what we're seeing is a lot of institutional investors are maybe playing a little bit of catch-up. A lot of them were pretty risk-averse in 2023 just because of the high interest rates. It was a bit of an uncertain climate. But now, if you want to make up for last time, where do you go for outsize return? You check out crypto and you also check out AI a little bit. So I do think we're seeing maybe some catch-up here. And that's why we're seeing a little bit of frenzy around Bitcoin again. Very interesting to hear the Robin Hood earnings call. Their CFO said that one in 20 of Bitcoin investors are getting into that crypto through an ETF. And most of those were new investors in Bitcoin. So that's a signal that.

the ETFs are attracting new retail investors, which was exactly what they had intended. Yeah. And then the final element pushing Bitcoin's price up is the upcoming Bitcoin halving, which is an event that occurs every four years or so that reduces the reward for mining Bitcoin transactions by a half. That does not sound like a real thing. It sounds like something I'd read in like J.R. Tolkien. I know. Well, it's programmed into Bitcoin. These events happen. They are predetermined and happen right around four years. And usually there is a massive price run up after it,

because, again, it's constraining supply of Bitcoin and supply and demand, baby. So Bitcoin having, that is slated to happen in April. So mark your calendars. All right, let's move on. If you were scrolling through Instagram the other day and stop to watch a video Mark Zuckerberg posted, you are in for a rare site in Fortune 500 CEO land. Zuck was talking specifically and candidly about a rival's product. It's no secret that when the Apple Vision Pro came out,

people immediately began speculating on what Zuck and met his 10-plus-year-old reality labs divisions thought about Big Bad Apple, horning in on their turf. And in the video, Mark posted, he told us that he was pretty unimpressed. He thought that the pass-through technology was worse and darker than on the Quest 3 and repeatedly mentioned the fact that the device was over seven times more expensive than the one his company makes. The standout line was, I quote, I don't just think that the Quest is the better value.

I think Quest is the better product, period. I can't stress enough that this is not something that you usually see CEOs doing. What do you make of Zucks sitting in his living room and just talking to us about his competition? Can you imagine the CEO of five guys just like walks into an in and out, takes a burger, takes it home? We'd love it. I think mine's a little bit better. No, this is extremely unusual. I'm trying to get into Zuck's headspace right now thinking about why he would post this.

What is the point? This is very unusual, as we've said. So I guess my thinking is that, you know, as I've said with this whole Vision Pro rollout, is he only has things to gain from Apple getting into this space. As you mentioned, the quest has been available. Meta's had a headset for 11 years now. I don't know how much there is awareness around it, but Apple getting into the industry and releasing its own headset maybe creates this halo effect that Zuck thinks can only be good for him.

So playing up the rivalry, I think, or he thinks benefits him. We'll see if it actually does. Yeah, I mean, he brought the receipts to this video, of course. I mean, it is a video that he had control over, but he said, Quest 3 weighs 120 grams less. Remember, that's a big knock on the Applevision Pro that it's so heavy on your face. He also says that he finds it gives you greater motion because there's a lack of the battery pack, and then also there's a wider field of view.

So he did definitely bring what he saw where the aspects of the Quest 3 that made it better than Apple Vision Pro. But I did see kind of multiple reactions to this. Kind of like the Twitter tech crowd really celebrated and said that it shows that he still got that fire in them. It's still a founder-led company. You wouldn't see any other companies doing this other than meta, which is probably true. But also, if meta wasn't on kind of this all-time heater right now, if it didn't just pass the trillion-dollar market cap, would you really want your CEO addressing competition? So I think it is a product of the environment and the year that meta has had, but I guess if you've had that year, you can do whatever you want. Yeah,

Zuck's like on a hot streak. He's a basketball. He's like Clay Thompson, who just hit five threes. Then he's just running down the core about to jack up another one because you're just riding a heater. But yes, the product that he has is 11 years old, and the product he was reviewing is 11 days old. Apple is totally going to iterate off this V2, V3, V4. It's going to be so much better than what it is now. So it is a really unfair comparison. I'll say the line. It's not an Apples to Apple's comparison. Sorry, everyone. Okay, we are going to hear a quick word from our sponsors,

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Welcome to Neal's numbers, the segment where I share three stats from the week's news that will make you the small talk hero at the office today. For my first number, it wouldn't surprise you if Baylor University in Texas beat Ivy League schools in sports, but maybe it would surprise you that Baylor University is beating the Ivy League in investing, too. Baylor's endowment grew 6.4% in the fiscal year ended June 30th, topping the returns of all the Ivy League endowments, the Wall Street Journal reported. With an 10.9% annualized return over the past five years,

it's beating all of the ivies except for Brown over that period, and it ranks in the top 5% for all U.S. endowments in that span. It is all thanked to the investment chief David Moorhead, aka the Oracle of Waco. When he arrived in 2011, Baylor's endowment was $900 million. Today, it's at $2 billion. What's Morehead's winning strategy? Well, it is a risky one.

He's a much more active than other endowment fund managers, adding or trimming holdings when an asset moves 10% one way or the other. If the market goes up, we take some money back. If the market goes down, we give it money. He said, it's finance 101. Yeah, I mean, shout out, Baylor. Also, first of all, school pride manifests in really strange ways. Why was I happy that Brad was sitting atop the endowment rankings?

But, hey, we'll take it where we can get it. I definitely think size of endowment plays a factor here. I mean, Harvard's over $50 billion, so you can't be splashing money around with an endowment that size. But there's not, I mean, I don't want to say there's not a lot to lose for Baylor. But, again, you can be a little bit more aggressive or when people are being more conservative because it is a relatively smaller endowment. His strategy around the sort of back-to-normal trade coming out of COVID was very interesting because everyone else was buying, you know, we were airline stock. hotels, restaurant socks coming out of the pandemic. But this guy was buying fuel payments provider for the trucking industry, Fleet Corps, Transdime, which is a maker of aerospace components,

likely to benefit from the resumption in travel. And then Excesso, which is ticketing software for theme parks. So you've got to go one level down. Yeah, deeper than we did for sure. Okay, moving on for my second number. You've heard about this conspiracy that Taylor Swift is a Pentagon Asset, who is part of a government plot to engineer a relationship with Travis Kelsey, have the chiefs win the Super Bowl, and boost her popularity to give her impending endorsement of President Biden in the upcoming election greater heft, right? Well, a new Monmouth poll out yesterday showed that nearly one in five Americans believe this is true.

Well, more than 80 percent reject it. It does split significantly along party lines. About a third of Republicans believe in the Taylor Swift government sciop compared to 6 percent of Democrats. And I think this aspect was the most fascinating. 42% of people who believe the conspiracy had never heard of it before they were informed of it in the poll. Yeah, I mean, I'm going to take a stance here. Honestly, good for Taylor Swift's brand.

Because if you're at the level of being a government's high of influencing elections, that means you've made it, maybe. So I think it's very good for a brand. But also, Taylor Swift has seen the real results of actually driving people to turn out and vote before. So that's probably why this is like mixed into this kind of conspiracy theory. I mean, she posted just one link on her Instagram story. Vote.org said it drove 35,000 registrations shortly after. So she really does mobilize a young force. So she has influence, whether she wielded or not, is up to her.

I mean, she endorsed Biden in 2020, and Biden is reportedly very hoping for endorsement in the upcoming election as well. My final number is about two five-star prospects who received scholarships to play at Winthrop University in South Carolina. To play what you ask? Well, Cornhole. Yes, Gavin Heyman and Jackson Remick, two high schoolers from Colorado, appear to be the first ever Division I recruits for Cornhole, the backyard game that requires players to throw beanbags into a hole.

For context, this is as seismic as when Toby Howell decided to play soccer for Marquette, a total game changer. These 17-year-olds are elite at Cornhole, winning the American Cornhole League High School National Championship twice. They're going to serve as the centerpiece of Coach Dusty Thompson's plan to build a powerhouse program at Winthrop. The Star Cornhole those aren't getting a full ride to Winthrop, though, because the sport isn't sanctioned by the NCAA. But still, getting at least some of your tuition knocked off because you can throw bags with extreme precision has got to make their parents happy. We're really getting into Toby's college lore today. But yes, I love the fact that not only are their Cornhole recruits, there are five-star Cornhole recruits.

I didn't know we were at a star rating system for this sport yet, but I love it. Sounds like these two are worth the building two-time American Cornhole League high school national champions. They truly are the, I mean, LeBronham James didn't go to college, I guess the Anthony Davis of Cornhole recruits. Yeah, I mean, Cornell is becoming a serious sport. ESPN televises it. these athletes are expected to get NIL deals, endorsements. So they're expected to make money from playing at Winthrop. Meanwhile, Winthrop is near Rock Hill, South Carolina, which is apparently the global

headquarters of Cornhole. They host a lot of championships there. So it's maybe not a coincidence that Winthrop and Cornhole and Rock Hill are all together in the same space. Absolutely. Let's move on. Earnings reports are always a stressful market moving time for companies, but Lyft somehow made its most recent report more stressful and more market moving than ever before.

The company accidentally added an extra zero to an important profitability metric, convincing investors that they expected their profit margin to expand by 500 basis points in 2024, when the number should have been 50 basis points. So even though it's only one zero off, it corresponds to around $630 million in forecasted profitability. That error also sent the stock up 67% in after hours trading as investors were buoyed by the unexpected optimism before falling to up just 15% after the correction. Lyft CEO has since come out and apologized for the error telling Bloomberg in her interview that it was, quote, my bad. Your bad indeed. Neil, it led a lot of people to wonder, what the heck is the proofreading process like at Lyft if a mistake like this can slip through the cracks?

Right. You might think with all of the earnings reports that come out every single. single quarter, there'd be more typos, to be honest. But analysts said that they had never seen anything of this scale in at least 25 years of covering Wall Street. So this was actually pretty significant. And it overshadowed what was a really good quarter for Lyft. So I'm sure the executive team is just really upset that everyone's talking about their typo instead of the fact that they're kind of on the path to profitability now. Yeah, but the weirdest part was that yesterday, after the mistake was corrected, the stock still was up as much as 30% during the day,

which is its biggest inner day gain ever and hit its highest point in a year. So it was like a very weird thing where how much of it was hangover from the 60% rise, how much of it was, yes, that they actually did have a good quarter. The CEO tried to blame it on AI for a second in an interview, but then someone came out and said, hey, listen, AI does not write our press releases. We don't really know what it was talking about. I did go in down the rabbit hole and see has something like this. happened before to other companies. And my favorite one was actually back in 1999. A biotech

company switched two digits on an inventory report. The share slid 10% after you corrected mistakes. They had to do it via fax, though. Imagine having to fax a correction to all these investors and have word travel slowly via fax versus via the internet. So definitely a different time back then. Finally, it's time to hand out this week's We Are So Back Award. And what is So Back this week are rom-coms. Yes, movies starring two very attractive people falling hopelessly in love and making us laugh along the way could stage a comeback after the surprising box office success of anyone but you starring Glenn Powell and Sidney Sweeney. In seven weeks at theaters, the film has racked up $170 million globally, including $80 million in North America. Compare that hall to its

budget of just $25 million. Hollywood is a copycat industry, so in Studio C, that kind of return, they could pile into more rom-coms, especially as big-budget superhero flicks fall out of favor with audiences. And if so, it would mark the revival of a genre that hadn't got much love, ironically, by Hollywood in the past decade. Between 2004 and 2010, studios consistently released between 15 and 25 rom-coms every year. But from 2011 through last year, there were less than 15 new rom-com or romance releases per year, and most years, there were fewer than 10. Toby, is Hollywood's interest in rom-coms a one-night stand or do you see actual chemistry? I am hesitant to crown rom-coms as back, Neal, because I think this was kind of a one-off movie. I mean, it was starring Sidney Sweeney and

Glenn Powell. There was a very large TikTok kind of interest in their relationship outside of the movie. Like, there was definitely rumors going around between some chemistry between them off the screen. So I think that helped kind of fuel this marketing boom. Also, a TikTok trend kind of piggybacked on top of the movie. People started dancing to a song, Natasha Benningfields. unwritten, absolutely incredible song. Yeah, exactly. And that kind of helped propel its popularity, too. And we saw that in the weird box office performance of this.

Because when this movie dropped, it brought in $6 million in its opening weekend, relatively disappointing, nothing to write home about. But then it just kept chugging along, the interest around it, powered by TikTok, just kept growing, and it ended up tallying $170 million globally. So all of that to say that, I do think this was a one-off, but maybe. Maybe that's the recipe. of a rom-com now is you put in a TikTok forward song. You get two people that'll generate conversation online, and that's how you write it to box office success over a couple months span.

You do see a bunch of stars signaling more interest in starring in rom-coms. There had been a deficit of male stars who wanted to start in rom-coms, according to Kate Hudson, who is, you know, one of the rom-com queens of the early days. Daniel Radcliffe said he wanted to star in a rom-com. Toby Howell, Toby Howell, Jason Mamoa. So I think if you see, there might be, you know, I think, again, this is a copycat industry. The big budget, $200 million budget superhero flicks, the Marvel Cinematic Universe, have not been performing well.

They're not making money. So I think there's going to be investment and attention given to types of movies that are starting to make money. I think 2018 crazy rich agents did really well at the box office. So there have been a few gems sprinkled throughout the. past decade of mostly non-rom-coms, but we could see a revival. I don't see why not. Do you have a rom-com top movie? You're not a rom-com guy? I'm a how-to-lose a guy in 10 days kind of guy. Of course you are. Or a hitched, actually. That's a great one. All right, that is our show

for the day. Almost a Friday, everyone, and the long weekend. You can send your thoughts on the episode or anything else that's on your mind. To our email, Morningbrewdaily at morningbrew. Let's roll the credits. Bryce Belloff is our editor and producer. Raymond Lou is our associate producer. Yuchina Ogu is our technical director. Billy Minino is on audio. Do you all think hair and makeup is a government si-out? I could be convinced. Devin Emery is our chief content officer

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